If I ask you—“Should a Cadillac dealer try to sell Chevrolets?”—your answer would be emphatically “NO.”
But they tried it once. Wanting to compete in the small car market, Cadillac introduced in 1981 a Chevrolet disguised as a Cadillac called a Cimarron. But even with a Cadillac emblem and a leather interior, it was still essentially a Chevrolet with a Cadillac price. It was a disaster for Cadillac from both an image and profit standpoint and was discontinued with the 1988 model. (By the way, wanting a Cadillac, but unable to afford a real one, I bought a Cimarron in 1987. It was embarrassing when I realized it was really just a Chevrolet in fancy clothes.)
I made the same mistake in business back in the 90’s. We were a Cadillac company—building large (up to 100’ length) expensive ($0.5M and up) aircraft assemblies for Lockheed, Airbus, Gulfstream, etc. Having some open capacity on some equipment, we decided to get in the Chevrolet business by going after some low value machining business to utilize some of our open capacity and make a little “incremental’ profit. It was a disaster and a hard lesson.
We learned that if you have a Cadillac customer base, and a Cadillac cost structure, don’t try to compete with Chevrolet dealers.
There are many downsides:
So, when tempted, remember:
#1 If all that matters is price—it’s a commodity. It is hard to differentiate your business in a commodity market.
#2 Customers will not pay Cadillac prices for a Chevrolet. And you can’t fool them with a Cimarron.
#3 This almost never works as a “growth” strategy.
#4 The shallow end is always more crowded for a reason. (Think about it.)
By the way, the Cimarron was pretty good Chevrolet; not a very good Cadillac.
The Hard Lessons Company
© 2014-2020
All rights reserved.
337 Whitewater Way
Franklin, TN 37064
615-519-3765
Leave a Reply